Tuesday, November 25, 2008

Expanding or Contracting?

Two articles in two separate Denver papers paint somewhat different pictures of what is going on with the Fastracks program. One discusses the exponential cost increases that have occured on the Northwest rail line. The usual libertarians are given a voice are calling for the line to be cancelled because in their view it was a worthless investment anyway. Losing out on direct transportation from the center of cities is not a proposition the proponents want to consider, since they had hoped to develop centers around the stations, something the opponents don't think is important. It shows thier true colors really. They don't believe that climate change is a problem and they don't really believe in the true conservative idea of saving infrastructure money by building centers instead of furthe sprawl.

Instead, Calongne says, the debate centers less on transportation and more on lost opportunities for development near rail stations. "If there's no train, then a train won't go through downtown Louisville or the south part of Westminster," she said. "That's what this is about." Officials agree that's a big part of the push for rail. "

FasTracks allows all of us to develop our urban centers," said Louisville Mayor Chuck Sisk. "Transit-oriented development keeps our population densities in the core areas," he said. "We made choices not to expand and grow our population outward, and this transit piece is the important part of growing and developing our cities."

But then there is the other article from the Denver Post. It states that the cost projections are all messed up by the global economic slowdown. Sure sales taxes have taken a hit, but so have commodity prices.

Pointing to the volatility of some commodity prices, Heimowitz presented a chart showing the price of steel (using an index cost of 100 for January 2001 as the base) bouncing from 252 last year to a high of 507 in June before tumbling to 384 in September, 257 in October and 144 on Nov. 14. "People were completely apoplectic about the price of steel four months ago," Heimowitz said, "and here we are, it's a whole other world."

If it continues this way, it could be a real boost to the program and lower construction costs, especially since fuel costs are down. And a stimulus boost would probably help even more, getting these projects moving faster. So what will happen? It would be nice to say that things will continue to go down, but we know that is bad for the overall economy. Perhaps some simple balance of the two would be best. But for now, we'll have to wait and see the true effect.

1 comment:

What should FasTracks do? It should build NOW, as fast as possible, with the cheap materials prices and lower construction and land acquisition costs.

Then it should pay for it later with income from after the economy rebounds.

In other words, it would be a great time to issue bonds -- if they can get decent rates.

If they can't, they should hire someone to play the commodities markets, and get the construction materials as cheaply as possible (there's got to be money for that) -- as well as locking in low fuel prices -- then wait to do the actual building until the economy rebounds a bit.

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